Foriegn Currency account- IAS 21

This query is : Resolved

Saifudheen Hamza (Querist)
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03 August 2010 Hi,

I am accounts in charge of leading automobile company. We transact all the foriegn payments currencies through FC A/C .

We normally accumulate the foriegn currecny whenever rate is good and use them when required.

Now , when we buy this foriegn currecny @ what rate we shall book?currently we book it at actual rate now ... pls advice me the currect treatment.

futher, @ what rate we shall book the supplier ? ie. costing the shipment. we use average rate of currency we bought
earlier .

also let me know at what rate we should make the payment for settling supplier ?
we use average rate of currency we bought earlier .

should i close this account every month by appying the actual closing rate and difference transfering to Forex loss/gain a/c?

kindly advice me here or @
Saifuo0209@gmail.com

Regards,
Saifudheen Hamza

CA SMR

CA SMR (Expert)
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10 August 2010 This response is as per my experience in recent past.
Foreign currency bought-As per actual rate
Booking of Supplier-Actual Forex rate prevailing at the date of invoice
Payment to Foreign vendor-Actual forex rate at the date of payment

Please note that as per AS 11,FC account should be revalued at the closing rate on the Balance Sheet Date.